Trump’s Tariff Threat Could Lead to Doubling Of IPhone Production In India To $30 Billion: Report

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A salesperson walks past an advertisement at an Apple reseller store in Mumbai, India September 1, 2021. REUTERS/Francis Mascarenhas

Apple may double its iPhone production in India to over $30 billion annually within the next two years, driven by potential tariffs imposed by U.S. President-elect Donald Trump on imports from China. According to a report by the Economic Times, India currently produces about $15-16 billion worth of iPhones. However, if Trump follows through on his campaign promise to impose steep tariffs on Chinese imports, Apple could significantly ramp up its manufacturing in India.

During his campaign

Trump pledged to impose a 60-100 percent tariff on goods imported from China, following years of trade tensions between the two nations. These proposed tariffs are part of Trump’s broader strategy to reduce dependence on Chinese manufacturing and bring more production back to the U.S. or to other countries. Trump, who defeated Democratic opponent Kamala Harris to win a second term in the White House, took similar measures in his first term, imposing various tariffs on Chinese imports between 2016 and 2020.

This policy direction could position Apple as a key player in India’s manufacturing landscape, enabling the company to expand its operations in one of its largest potential markets. According to the Economic Times report, an unnamed official noted that while certain sectors might face challenges, the electronics sector, especially iPhone manufacturing, could experience substantial growth in India.

Trump

Neil Shah, Vice President at Counterpoint Research, told that Apple’s growing commitment to premium products, including the iPhone Pro series now manufactured in India, could push production value to exceed $30 billion annually in the coming years. This potential increase underscores India’s emerging role as a global manufacturing hub for electronics, particularly as more companies look for alternatives to China due to rising costs and geopolitical tensions.

Apple has gradually increased its presence in India’s smartphone market

Market share reaching 6 percent in 2023. More notably, Apple commanded 23 percent of the revenue share in the smartphone market, surpassing Samsung’s 21 percent share. Apple’s success in India has been marked by a steady rise in iPhone shipments, reaching over 10 million units in 2023, up from 6 million in 2022. This growth has solidified Apple’s position as the leader in revenue among smartphone manufacturers in India, ahead of Samsung.

India’s favorable demographics and a growing appetite for premium devices make it an attractive market for Apple. By increasing production locally, Apple can tap into the country’s vast consumer base while potentially avoiding U.S. tariffs on Chinese imports. Moreover, local production helps Apple circumvent import duties on fully assembled devices, making its products more competitively priced within the Indian market.

However, experts have cautioned that India’s potential to double iPhone production and attract more manufacturing investments depends on certain critical factors. India will need to undertake policy reforms to address inefficiencies in costs and uncertainties surrounding government regulations. If these issues are not resolved, there is a risk that companies like Apple may opt for other countries such as Vietnam, which has become a popular alternative manufacturing base due to its favorable policies and cost advantages.

In recent years

The Indian government has taken several steps to make the country more attractive for manufacturing. Initiatives such as the Production Linked Incentive (PLI) scheme have provided financial incentives for companies to boost local production. The government’s focus on strengthening infrastructure, streamlining processes, and reducing red tape aligns with the needs of large-scale manufacturers like Apple. However, experts argue that these reforms need to be more comprehensive to ensure that additional production capacities remain in India and do not move to other countries.

Trump

The broader geopolitical landscape is also playing a significant role in India’s manufacturing potential. As tensions between the U.S. and China continue to affect global trade dynamics, companies are looking to diversify their supply chains to mitigate risks. India, with its large and growing workforce, is well-positioned to capture some of this manufacturing shift. However, to achieve its goals, India must continue to focus on improving its business environment, addressing cost barriers, and enhancing policy stability.

If Trump’s proposed tariffs on Chinese imports are enacted

Apple’s plans to expand production in India could transform the country into a major global hub for iPhone manufacturing. For India, this would mean not only a boost in the electronics sector but also an opportunity to strengthen its position in the global supply chain.

The possibility of increased tariffs on Chinese imports under Trump’s administration could present India

A unique opportunity to become a significant player in global iPhone production. While India’s current production stands at around $15-16 billion annually, experts predict this figure could potentially double if policy and infrastructure reforms are implemented effectively. For Apple, expanding its manufacturing footprint in India would not only help mitigate tariff risks but also support its growing influence in the Indian smartphone market. As global trade dynamics evolve, India’s role as a manufacturing hub for high-value electronics like iPhones could solidify, provided the necessary regulatory and cost-efficiency measures are taken to ensure a favorable business environment for long-term investments.

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